Please note that wearing of helmet is made compulsory under Section 129 of the MV Act. Violation of it is punishable under Section 177 of the MV Act. Now, for the first offence under Section 177, the maximum punishment itself is a fine of up to the amount of Rs. 100. Therefore, when the maximum penalty itself can be only Rs. 100 and if the accused is willing to pay that maximum penalty there is no reason why that should not be accepted by the police, whether the officer be from the traffic police or the local police.
In fact, generally, the officers of the local police station are not aware of their powers under the MV Act. Generally, they do not exercise their powers under the MV Act, even if they have those powers since there is a special department to deal with such cases, i.e., traffic police. Nevertheless, the local police station has the power to book people for traffic offences. You can read the MV Act and everywhere you’ll find the words used such as “any police officer”. This expression clearly covers police officers from local police station, in addition to the traffic police.
Now, since the officers of the local police station are not generally booking people under MV Act, they would not carry the challan books or the receipt books for compounding as are carried by the traffic police which is specialised only for this purpose. This can perhaps be one reason why the local police issues a court challan instead of a compounding challan. As far as I understand, the provisions of compounding are applicable to all police officers alike, though I could not get cross-check or confirm it since I could not find the relevant Delhi Government Orders on compounding on the Internet.
Power to impound or seize a document is given under Section 206 and 207 of the MV Act. Usually, it is only one specific document that is seized, depending upon what type of violation has occurred. Read these sections for full details as to which document can be seized in which situation.